Watering the ATM deserts – what must banks do to extend services?

Recently, concerns were raised in the UK about the potential for many of the country’s free-to-use ATMs to disappear, following proposed changes to the way that they are operated.

Naturally, this caused concerns among consumers, and the level of objections to the plans emphasizes the fact that, despite what some predictions say, access to cash is still a vital part of everyday life, even in developed markets where non-cash alternatives have become prominent.

Ron Delnevo, executive director for Europe at the ATM Industry Association, was one voice who warned of the risks this poses. He said: “The proposals … are likely to create ATM deserts, where communities will wither because there is no local convenient access to cash and other financial services.”

The threats posed by ATM deserts

The prospect of more ‘ATM deserts’ arising, where communities have limited or no easy access to cash, should be a concerning one for the entire industry. While in the UK, where consumers have become accustomed to having access to free ATMs, there may be concerns about losing this access, it is a global issue that will need to be addressed.

In 2016, for example, the Federal Reserve Bank of New York explored the risks posed by banking deserts – covering access to all banking services, including branches. Perhaps unsurprisingly, it found low-income communities are among those most affected by a lack of access to financial services, and this often leads them into less secure and higher-cost ways of accessing finance.

Even where branches are unavailable, an ATM is often a vital lifeline to these services – especially as the latest generation of multifunctional self-service devices allows users to carry out many more activities than in the past. But if an individual has to travel several miles simply in order to deposit or withdraw cash, this will make them less inclined to engage with formal banking. This is especially true in low-income areas and those with limited public transportation options, where such travel may be time-consuming, inconvenient and costly.

What banks can do to close any gaps

However, this does also present opportunities for forward-thinking and proactive banks to step in and pour water on these ATM deserts – provided they have the right tools at their disposal in order to achieve this cost-effectively without compromising on the services consumers need.

One solution they have at their disposal is more amounts of data than ever, from existing ATM networks and external sources, which can be studied to determine where any services are lacking and what potential there is for changing this. Operators with the highest levels of visibility into their networks can quickly determine optimum device placement, for example, that ensures they are both placing ATMs where they are most needed and selecting the most accessible and convenient locations to generate the most traffic.

Strong ATM management solutions can also ensure that these devices are able to work as cost-effectively as possible, tackling one of the biggest concerns operators may have about placing machines in current deserts. Optimization tools that can streamline the process of replenishing ATMs, coupled with cash recycling technologies, help cut the cost of operating a network, while proactive maintenance and monitoring ensures high availability.